Macroeconomics (MindTap Course List)
10th Edition
ISBN: 9781285859477
Author: William Boyes, Michael Melvin
Publisher: Cengage Learning
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Question
Chapter 4, Problem 2E
To determine
The sector (households, business, or international) that spends the most, the sector that spends the least and the sector having the highest volatility of spending.
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Which sector (Households, Businesses, or International) spends the most? Which sector spends the least? Which sector, because of its volatility, has an importance greater than is warranted by its size?
What is the impact of spending changes on GDP?
There are four spending groups that buy GDP: consumption, investment, government purchases, and net exports. Which group is the largest? Which one fluctuates the most?
Chapter 4 Solutions
Macroeconomics (MindTap Course List)
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- Historically, the change in real GDP during recessions has been a. mostly a change in investment spending.b. mostly a change in consumption spending.c. about equally divided between consumption and investment spending.d. sometimes mostly a change in consumption and sometimes mostly a change in investment.arrow_forwardExplain some reasons why consumption spending and gross private domestic investment spending are so important. What determinants do they have in common?arrow_forwardTotal spending in the economy is equal to consumption plus investment plus government spending plus net exports. If households want to save and thus do not use all of their income for consumption, what will happen to total spending? Because total spending in the economy is equal to total income and output, what will happen to the output of goods and services if households wants to save more?arrow_forward
- Is a family a household? Is a household a family? Which sector (Households, Businesses, or International) spends the most? Which sector spends the least? Which sector, because of its volatility, has an importance greater than is warranted by its size? What does it mean if net exports are negative? People sometimes argue that imports should be limited by government policy. Suppose a government quota on the quantity of sugar to be imported to the United States occurs. What is likely to happen to the price of sugar in the United States and in the rest of the world? List the four sectors of the economy along with the type of spending associated with each sector. Order the types of spending in terms of magnitude, and give an example of each kind of spending. Using the interconnection between sectors of the economy, explain the effects of imposing an increase in taxes on the household sector.arrow_forwardIf the United States introduces universal child care, what will likely happen to GDP? Explain fully why you expect the effect. Will this increase/decrease overall public welfare? Why?arrow_forwardAre disposable per capita income and Gross disposable household income the same?arrow_forward
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